Rich Bitch Step 7: Lock It Up

I wish I had learned the discipline of saving money earlier in my life. I started working at the age of 16 and had nothing to show for it by the time I got to college and started living on my own. Every paycheck I got on a Friday would be gone by a Monday. And when I had to deal with car payments or store credit cards in my early 20s, that’s where my money would go. I just turned 26 and I’m still struggling.

Step 7: Save Your Money

Though I’ve been reading each step and figuring out how it applies to my life, what really is most relevant is building an emergency fund and other savings accounts that let me live comfortably/worry free. And right now my short term goals are to save enough money to move out of my current apartment (Need first/last months rent, security deposit, and money to hire movers–it’s going to be close to $3,000! Crazy, right?) Saving to move is different from saving in case I lose my job, have medical bills, or other emergencies. And saving takes a lot of time, especially if it’s recommended to save between 3-6 months worth of living expenses. {deep breath before I cry at how hard it is to save in the city that has one of the highest costs of living}.

Basic tips I got out of this chapter:

Make the savings automatic: After last week’s post, that’s exactly what I did. I set up automatic transfers to my savings account on a bi-weekly basis to coincide with my paychecks.

Diversify your savings: Right now I have my savings account that attached to my checking and I have a second savings plan called Acorns. It’s an app that rounds up my change from each of my debit card transactions and puts it in a diversified portfolio. The small change has really added up, within 6 months I saved $250 and it’s finally starting to show progress in getting money from investing in the stock market! I could make extra payments into this account, but I want to let my change work for me. The good thing is that I can take money out at any time without penalty.–Other types of savings accounts are a Money Market Account (MMA) and Certificates of Deposit (CD). These two types of savings accounts are taxed, rather than if you were to open a Health Savings Account (HSA), if your insurance offers it, which is untaxed (I opened a HSA at my old job and still have the money untouched since then –not currently putting any money in with my new job).

Have some money stashed at home: Lapin recommends having a couple hundred dollars in cold hard cash somewhere in your home for emergencies like losing your debit card and waiting for a replacement. This is nice in theory, but for me, knowing that there’s cash in my house will only make me want to spend it.

Lapin’s bottom line suggests going to different banks and looking for ways to get the most out of their interest rates, to find the best deal in terms of your type of investment and getting the most from the interest rate. Just because you’re a good customer, doesn’t mean your bank is going to treat you better. And her other piece of takeaway wisdom is to not keep all your money under your mattress. I can agree with her on that point. It’s not easy for me to set up a MMA or CD with the type of money I am making now, but I would consider it in the future. Saving is a long, tedious process and I am not looking forward to changing how I see myself with money, but I hope I have something to show for it as I get older.